FURTHER falls in wool prices this week have been blamed on the recent extended price rise run, rising shipping and logistics costs driven by Middle East conflict, increased supply and currency changes.

The Australian Wool Exchange said prices fell again this week, adding further losses to those witnessed last week, with currency fluctuations also having an impact.

AWEX said 39,673 bales were offered, 2605 bales fewer than last week.

“On the opening selling day (Tuesday) in the Merino fleece sector the Micron Price Guides (MPGs) dropped by between 5 and 59 cents, with only the 20-and 21-micron MPGs in the north managing gains.

“Falls in the crossbred, skirting and oddment sectors were also recorded,” AWEX said.

AWEX said the benchmark Eastern Market Indicator (EMI) dropped by 21 cents, falling to 1730 cents/kg clean.

“Due to a weakening in the Australian dollar (AUD) compared to the US dollar (USD), the fall in the EMI was more significant.

“As the majority of Australian wool is traded using US currency any change in the exchange rate has an immediate impact on the wool market,” AWEX said.

“As the AUD dropped below US70 cents for the first time since January, the fall in the EMI was US39 cents.

“This was the largest fall in the EMI is USD terms since October last year when it fell by US45 cents,” AWEX said.

“On the second selling day (Wednesday), the market settled to a degree with mixed results recorded.

“The movements in the MPGs ranged between plus 6 cents and minus 26 cents.”

AWEX said the other three sectors again recorded general losses.

“The result of these combined falls was a 6-cent reduction in the EMI.

“The EMI finished the week 27 cents lower, closing the week at 1724 cents/kg clean.”

AWEX said the EMI fell by a further US5 cents for the day, dropping US44 US cents for the series and closing at US1202 cents.”

Wool market feeling the headwinds – AWI

Australian Wool Innovation said price weakness was concentrated in the 18.5-21 micron Merino fleece range, with falls generally in the order of 40-60 cents, particularly across southern and western selling centres.

“In contrast, the northern region showed relative resilience, with some firmness in the 20-21 microns.

“Crossbred wools also recorded declines across most microns.”

AWI said passed-in rates this week sitting at 9pc nationally, with the west exceeding 13.”

Elevated passed-in levels, particularly in Merino fleece (>10pc in some regions), signalled some growing seller resistance. AWI said.

AWI said the continued strong offerings this year is notable in the backdrop of a reduced national production.

“Offerings year on year are sitting 4.2pc lower while per the February AWTA update testing is sitting 9.4pc behind the previous season.

“This gap is notable and is presumably being filled by broker or farm held stocks, as sellers respond to stronger pricing,” AWI said.

“As this extra throughput is worked through the sale rooms, the continued higher weekly offerings of around 40,000 bales would look to be unsustainable.”

AWI said rising shipping and logistics costs driven by the Middle East conflict, increased supply in the auction rooms easing competitive pressure, and a sustained period of price increases have all contributed to some modest retracements in the market in recent weeks.

“The coming weeks will reveal how well the market can absorb these headwinds.”

Next week’s offering is again expected to reduce, there is currently 37,815 bales on offer in Sydney, Melbourne and Fremantle.

Sources – AWEX, AWI.